Internationales Immobilien-Institut GmbH
Reinhard Mattern
According to Reinhard Mattern, chairman of the management board at BNP Paribas REIM Germany, “Traditional core real estate increasingly fails to meet the return expectations of institutional investors because of movements in real estate prices. For that reason there is a great interest in non-core properties that can be developed into core properties."
BNP Paribas Real Estate Investment Management and Cording Real Estate Group have teamed up to launch a value-add German real estate Spezialfonds
The €150m Real Value Fund will acquire and improve assets and has already bought the landmark Media Tower in Düsseldorf’s Media Harbour. It says it has already secured commitments from instituional investors for more than one-third of its target volume.
The fund is structured as an open-ended Spezialfonds for German institutional investors and designed to capitalise on the significant appetite among investors for core assets.
According to Reinhard Mattern, chairman of the management board at BNP Paribas REIM Germany, “Traditional core real estate increasingly fails to meet the return expectations of institutional investors because of movements in real estate prices. For that reason there is a great interest in non-core properties that can be developed into core properties. Our Real Value Fund uses a manage-to-core approach and, therefore, is able to unlock the latent value of a property."
Rodney Bysh, joint CEO of Cording, said: “We believe there is a compelling opportunity in the value-add segment for specialist real estate managers with a local presence and understanding of the market.
“Over time, many core properties have become value-add buildings with vacant space and renovation needs. We acquire these kinds of properties and apply our proven management approach to reposition them”.
The “manage-to-core strategy” will be applied to the 64-metre high Media Tower which has 18 floors and approximately 9,000sqm of flexible space. The property is in a sought-after location with strong demand from creative, high-growth companies, and the Media Harbour has only a 7% vacancy rate., with several new projects in the adjoining areas in the planning or building phase.
Completed in 2006, the property is approximately 50% occupied after the expiry of some leases, with the average remaining term of the remaining leases only 2.8 years. It has therefore largely completed its first-use cycle. Cording will reposition and renovate the property in a bid to increase cash flows and capital value.
Both BNP REIM and Cording have been expanding their German businesses in recent years. The former acquired iii-investments in 2013 while the latter bought property manager MGI and then merged its German arm with Marstall Verwaltungsgesellschaft.
